Blue Corporation began business in 2007. The following summarizes the income (lo
ID: 2467324 • Letter: B
Question
Blue Corporation began business in 2007. The following summarizes the income (loss) of the company over the period 2007-2009.
Year: Taxable Income (loss)
2007 100000
2008 50000
2009 (200000)
The company has no permanent or timing differences during the period (pre-tax financial reporting income is the same as its IRS taxable income). The tax rate during this time is 40%. The company takes advantage of the loss-carryback provision. When recording the tax benefits of any loss-carryforward provision, the compant felt it was more likely than not that the tax benefits would be fully realized.
Provide the journal entry or entries to record the tax related amounts for 2009.
Explanation / Answer
Deferred Tax Asset A/c. Dr. $80000
To Profit and Loss A/c. $80000